Discussion:Unpaid bill

(See last paragraph)

(b) For purposes of this section--Records of the client include all documents or written or electronic materials provided to the practitioner, or obtained by the practitioner in the course of the practitioner’s representation of the client, that preexisted the retention of the practitioner by the client. The term also includes materials that were prepared by the client or a third party (not including an employee or agent of the practitioner) at any time and provided to the practitioner with respect to the subject matter of the representation. The term also includes any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner, or his or her employee or agent, that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current Federal tax obligations. The term does not include any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner or the practitioner’s firm, employees or agents if the practitioner is withholding such document pending the client’s performance of its contractual obligation to pay fees with respect to such document.

A nice letter to the client and his new preparer can clear the way I think. Tell them like JR says "when hell freezes"...hehe

Or Ted Kennedy goes into rehab. Or there's no fighting the Middle East.... When politicians lower taxes.

Records transfer: A former tax client of yours demands you provide copies of all his records to his new accountant. The former client has not yet paid you for preparing last year’s tax returns.

How would you respond to this request? Would your response be different if the engagement had been terminated before it was completed? How would state board of accountancy rules affect your response?

AICPA Professional Standards, ET section 501, says holding back client records after they’re requested is an act discreditable to the profession. In most states, holding such records hostage for fees would be considered a violation of state board of accountancy rules, subject to a citation, a fine—or worse. From a loss-prevention standpoint, it’s usually unwise to add fuel to the fire by not cooperating with former clients’ transition to another CPA.

Much of this issue’s risk exposure stems from confusion over what constitutes client records. According to ET section 501.01, client records are any accounting or other records belonging to the client and provided to the CPA by, or on behalf of, the client. If an engagement isn’t completed, the CPA is required to return all records provided, regardless of whether or not fees have been paid.

If the CPA completed the engagement, she should be ready to provide workpapers demonstrating information not otherwise reflected in the client’s books and records to assure the client’s financial information is complete. The CPA can require payment before releasing her work.

Note: Many state boards of accountancy have expanded the AICPA’s definition of client records to include workpapers such as adjusting journal entries, depreciation schedules and bank reconciliations, for example, that would not otherwise be available to the client. Under state board rules, the CPA must turn over all client records and cannot hold this information hostage for fees—even though the AICPA doesn’t designate these workpapers as client records. In such instances the state board rule supersedes the AICPA rules.

If he doesn't pay the collection compnay will harang him to pay and eventually if he doesn't they will file a lien and he can have fun trying to refi or sell his property. Eventually you will get paid.

In my state this is legal to send a client to collections, you may want to check your state however.

When called by the new preparer I have, in the past, explained that everything I did was work product. In this case they were asking for the depreciation report. I simply explained that the client should provide the new preparer with prior year returns and with this the preparer should be able to recreate accurate depreciation records. I certainly am not going to give to the client or the new preparer any documents I prepared and do not charge the client for. I don't charge for worksheets...just the finished form they created. Worksheets necessary to prepare the return are work product in my office.

Oh, my. If no Reg says such notification to IRS is required, as I'm sure the case, that's only just a lie. It assuredly is not a material falsity under criminal section 7206.

good Luck !

btw I agree with JR1